Exhibit 10.7
ESCROW AGREEMENT
This Escrow Agreement (the "Escrow Agreement") is executed on May 8,
2001, entered into and effective as of the 1st day of January, 2001 (the
"Effective Date") by and between Princeton BioMeditech Corporation, a New Jersey
corporation ("PBM"), and Worldwide Medical Corporation, a Delaware corporation
("Worldwide"). PBM and Worldwide are sometimes collectively referred to herein
as "Parties" and individually as "Party". Capitalized terms not otherwise
defined in this Agreement shall have the meanings ascribed to them in the
Promissory Note (as hereinafter defined).
RECITALS
A. Worldwide has executed a Convertible Secured Promissory
Note dated as of the Effective Date in favor of PBM (the
"Promissory Note"), pursuant to which Worldwide has agreed to
pay PBM the principal amount of $631,513.37.
B. The Promissory Note provides, among other things, that, in
lieu of interest thereon, Worldwide shall deposit into escrow a
total of 300,000 shares of Worldwide's Common Stock (the "Escrow
Shares"), to be redelivered to Worldwide or released to PBM, as
the case may be under the terms of the Promissory Note and this
Escrow Agreement.
C. This Agreement is intended to and shall, among other
things, set forth the terms and conditions of the deposit and
disposition of the Escrow Shares.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, PBM and Worldwide, intending to be
legally bound hereby, agree as follows:
1. Appointment of Escrow Agent; Commencement and Termination.
(a) Worldwide and PBM hereby nominate, constitute and
appoint Xxxxxxx X. Xxxx, Esq. as escrow agent (the
"Escrow Agent") upon the terms and conditions set forth
in this Agreement.
(b) The escrow established by this Agreement (the
"Escrow") shall commence on the date of the delivery to
the Escrow Agent by Worldwide of a certificate or
certificates representing the Escrow Shares, endorsed
for transfer in blank in accordance with this Escrow
Agreement. Worldwide agrees to deliver to the Escrow
Agent the certificate(s) representing the Escrow Shares
not later than June 8, 2001. The Escrow Shares shall not
be registered under the Securities Act of 1933 or any
state blue sky law, and shall bear a restrictive legend
so indicating. The number of Escrow Shares shall be
subject to adjustment on the same terms and conditions
as provided for in Section 7 of any of the Warrants
issued by Worldwide to PBM in connection
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with the issuance of the Promissory Note, such that
whenever there shall be an adjustment in the securities
or number of securities that are issuable upon exercise
of any such Warrant, there shall be a adjustment in the
number of Escrow Shares, on the same basis as any
adjustment in the securities issuable upon exercise of
any such Warrant.
(c) The Escrow shall terminate on the earlier to occur of
(i) the resignation or removal of the Escrow Agent in
accordance with the instructions and conditions
contained in Section 7 hereof; or (ii) the final
distribution by the Escrow Agent of the Escrow Shares in
accordance with the terms of this Escrow Agreement.
(d) The Escrow Agent agrees to act in accordance with the
instructions in this Escrow Agreement. The Escrow Agent
shall be reimbursed by Worldwide promptly upon
submission of an invoice or invoices on a monthly basis
for all of the Escrow Agent's fees at his standard
hourly rates and out-of-pocket expenses incurred in
connection with this Escrow Agreement.
2. General Instructions. Unless and until any of the events or
contingencies specified in this Escrow Agreement shall occur, the Escrow Agent
shall hold and retain in his possession at all times all of the Escrow Shares.
3. Instructions and Conditions of Release of the Escrow Shares. The
Escrow Shares shall be released by the Escrow Agent to Worldwide and/or PBM, as
the case may be, under the terms of this Escrow Agreement as follows:
(a) If the principal amount of the Promissory Note shall be
reduced to zero prior to January 1, 2002 (whether by
payment by Worldwide, conversion by PBM into shares of
Common Stock, or otherwise), then the Escrow Agent shall
deliver all of the Escrow Shares to Worldwide, and PBM
shall not be entitled to any of the Escrow Shares.
(b) If the principal amount of the Promissory Note shall be
reduced to zero after December 31, 2001 but prior to
July 1, 2002 (whether by payment by Worldwide,
conversion by PBM into shares of Common Stock, or
otherwise), then the Escrow Agent shall deliver (i)
225,000 of the Escrow Shares to Worldwide and (ii)
75,000 of the Escrow Shares to PBM.
(c) If the principal amount of the Promissory Note shall be
reduced to zero after June 30, 2002 but prior to January
1, 2003 (whether by payment by Worldwide, conversion by
PBM into shares of Common Stock, or otherwise), then the
Escrow Agent shall deliver (i) 150,000 of the Escrow
Shares to Worldwide and (ii) 150,000 of the Escrow
Shares to PBM.
(d) If the principal amount of the Promissory Note shall be
reduced to zero after December 31, 2002 but prior to
July 1, 2003 (whether by payment by Worldwide,
conversion by PBM into shares of Common Stock, or
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otherwise), then the Escrow Agent shall deliver (i)
100,000 of the Escrow Shares to Worldwide and (ii)
200,000 of the Escrow Shares to PBM.
(e) If the principal amount of the Promissory Note shall be
not be reduced to zero prior to July 1, 2003 (whether by
payment by Worldwide, conversion by PBM into shares of
Common Stock, or otherwise), then the Escrow Agent shall
deliver all of the Escrow Shares to PBM, and Worldwide
shall not be entitled to any of the Escrow Shares.
(f) The Escrow Agent shall deliver certificates representing
the Escrow Shares in the amounts set forth in this
Section 3 to the Party or Parties, as the case may be,
not later than 20 days after being advised by the
Parties in a jointly signed writing of the aggregate
principal amount of the Promissory Note paid by such
relevant date.
(g) The Escrow Agent shall be deemed authorized and directed
by the Parties to complete on the certificates
representing any of the Escrow Shares the name of the
Party or Parties, as the case may be, to whom
certificates shall be issued, as well as the number of
Escrow Shares to be represented by such certificates,
under the terms of this Section 3.
4. Receipts. Any of the Parties or the Escrow Agent may, at its option,
demand a receipt as a condition of the delivery of any payments, stock
certificates, securities or documents under this Escrow Agreement
5. Indemnity and Disputes. In the event that prior to the termination of
the Escrow, the Escrow Agent receives or becomes aware of conflicting demands or
claims with respect to the Escrow or the rights of any of the Parties for any
reason whatsoever, the Escrow Agent shall have the right to discontinue any or
all further acts on his part until such conflict is resolved to his reasonable
satisfaction. In such event, the Escrow Agent shall not pay or release the
Escrow, and, except as provided in this Agreement, shall not comply with any
claims, demands or instructions from any of the Parties with respect to the
Escrow. The Escrow Agent shall not be or become liable in any way to PBM,
Worldwide or any other person or entity for his failure or refusal to comply
with such conflicting claims or demands. The Escrow Agent shall be entitled to
refuse to act until: (i) such conflicting or adverse claims or demands shall
have been finally determined by a court of competent jurisdiction; (ii) such
conflicting or adverse claims or demands shall have been settled by agreement
between the conflicting parties as evidenced in a writing satisfactory to the
Escrow Agent; or (iii) the Escrow Agent shall have received security or an
indemnity satisfactory to the Escrow Agent sufficient to save him and his
affiliates harmless from and against any and all loss, liability or expense
which he or any of them may incur by reason of his acting.
6. Liability of the Escrow Agent. The Escrow Agent (which term for
purposes of this Section 6 shall refer to any and all affiliates of the Escrow
Agent) shall not be liable for any error of judgment or for any act done or
omitted by him in good faith, or for anything he may in good faith do or refrain
from doing in connection with this Agreement; nor for any negligence other than
his gross negligence; nor shall the Escrow Agent be answerable for the default
or
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misconduct of his agents, attorneys or employees, if they be selected with
reasonable care; nor will any liability be incurred by the Escrow Agent, if, in
the event of any dispute or question as to his duties or obligations under this
Agreement, he acts in accordance with advice of his legal counsel. The Escrow
Agent is authorized to act upon any document believed by him to be genuine and
to be signed by one or more of the Parties, and will incur no liability in so
acting.
7. Resignation or Removal of Escrow Agent. The Escrow Agent may resign
at any time, upon thirty (30) days' prior written notice to PBM and Worldwide,
and may be removed by the mutual consent of PBM and Worldwide, upon at least
thirty (30) days' prior notice to the Escrow Agent. Prior to the effective date
of the resignation or removal of the Escrow Agent, or any successor escrow
agent, PBM and Worldwide shall appoint a successor escrow agent to hold the
Escrow then held by the Escrow Agent, and any such successor escrow agent shall
execute and deliver to the predecessor escrow agent and to PBM and Worldwide an
instrument accepting such appointment, and thereupon such successor escrow agent
shall, without further act, become vested with all the rights and powers of the
predecessor escrow agent as if originally named in this Escrow Agreement, and
shall thereafter become subject to the duties of the predecessor escrow agent.
If PBM and Worldwide are unable to agree on a successor escrow agent by the
effective date of the resignation or removal of the Escrow Agent, or any
successor escrow agent, the Escrow then held by the Escrow Agent or such
successor escrow agent shall be deposited jointly with PBM and Worldwide.
8. Governing Document. In the event that any terms, provisions, rights,
duties, or obligations set forth in this Escrow Agreement should be in conflict
with any terms, provisions, rights, duties, or obligations set forth in the
Promissory Note or any agreements collateral thereto, the terms, provisions,
rights, duties, or obligations set forth herein shall control and the conduct of
the Escrow Agent shall be governed accordingly.
9. Notices. Any notice required to be given under this Agreement or
which may be given under this Escrow Agreement to any party or the Escrow Agent
shall be in writing and shall be deemed given: (a) upon receipt if delivered or
sent by identified telecopier; or (b) one (1) business day after being sent via
reputable overnight courier, prepaid; (c) or three (3) business days after being
sent by registered or certified mail, postage prepaid, return receipt requested;
or (d) personally delivered to the Parties or the Escrow Agent at their
respective addresses or telecopy numbers set forth below their respective names
on the signature page hereof. Any of the Parties to this Escrow Agreement and
the Escrow Agent may, by notice delivered to the Escrow Agent or the other
Parties, as the case may be, change its address for purposes of this Agreement.
10. Miscellaneous.
(a) Entire Agreement and Modification. Except as expressly
reserved or otherwise provided herein, this Escrow
Agreement constitutes the entire agreement between the
Parties with regard to its subject matter. The Escrow
Agent shall not be bound by any modification of this
Escrow Agreement unless there is delivered to the Escrow
Agent a written modification signed by the Parties. No
such modification shall, without
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the prior written consent of the Escrow Agent, modify
the provisions of this Escrow Agreement relating to the
duties, obligations or rights of the Escrow Agent.
(b) Words and Phrases. Words and phrases such as "to this
Agreement," "herein," "hereinafter," "hereto," "hereof,"
"hereby," "hereinbelow," and "hereunder" when used with
reference to this Escrow Agreement, refer to this Escrow
Agreement as a whole, unless the context otherwise
requires.
(c) Severability. If any provision of this Escrow Agreement
is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the provisions that have
not been held invalid or unenforceable shall remain in
full force and effect and shall in no way be affected,
impaired or invalidated.
(d) No Waiver. No failure or delay on the part of either the
Parties of the Escrow Agent, or any of them, in
exercising any right, power or privilege under this
Agreement shall constitute a waiver thereof or of any
other right, power or privilege under this Escrow
Agreement.
(e) Gender and Number. Wherever from the context of this
Escrow Agreement it appears appropriate, each term
stated in either the singular or the plural, and
pronouns stated in either the masculine, feminine or
neuter gender, shall include the masculine, feminine and
neuter.
(f) Consent to Jurisdiction; Choice of Law. Any and all
claims by or against any of the Parties and/or the
Escrow Agent shall be decided under the laws of the
State of California, with venue in Orange County,
California and each of the Parties and the Escrow Agent
hereby consent to the exclusive jurisdiction of, and
agrees not to commence any action in a court other than,
the state and/or federal courts of the State of
California for the purpose of making claims under this
Escrow Agreement. Each Party and the Escrow Agent
irrevocably and unconditionally waives any objection to
the laying of venue in Orange County, California, in
connection with any action that may be brought hereunder
in the state and/or federal courts of the State of
California, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim
in any such court that any such action brought in any
such court has been brought in an inconvenient form.
(g) Benefit. This Escrow Agreement shall be binding upon and
inure to the benefit of the Parties, the Escrow Agent,
their respective, successors and assigns.
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(h) Counterparts. This Escrow Agreement may be executed by
the Parties and the Escrow Agent in separate
counterparts, each of which when so executed and
delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of
copies hereof each signed by less than all, but
altogether signed by the Escrow Agent and all of the
Parties hereto.
IN WITNESS WHEREOF, the Parties and Escrow Agent have hereunto set their hands
and seals as of the date first above written.
WITNESS WORLDWIDE MEDICAL CORPORATION
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. XxXxxxx,
President
(Fax Number: 000-000-0000
By
----------------------------------- ------------------------------------
Xxxxxx XxXxxxx, President
WITH A COPY TO: XXXXX XXXX LLP
(which shall not 0000 Xxxx Xxxxxx, Xxxxx 000
constitute notice) Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esquire
(Fax Number: 000-000-0000)
WITNESS PRINCETON BIOMEDITECH CORPORATION
0000 X.X. Xxxxx 0
Xxxxxxxx Xxxxxxxx,
Xxx Xxxxxx 00000-0000
Attention: Xx. Xxxx Xxxx
(Fax Number: 000-000-0000)
By
----------------------------------- ------------------------------------
Xxxx Xxxx, President
WITH A COPY TO: FOX, ROTHSCHILD, O'BRIEN & XXXXXXX
(which shall not 000 Xxxxx Xxxxx
constitute notice) Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx,
Esquire
(Fax Number: 000-000-0000)
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The undersigned, intending to be legally bound, hereby agrees to act as
Escrow Agent under and pursuant to the terms and conditions of this Agreement.
WITNESS ESCROW AGENT
----------------------------------- ---------------------------------------
Xxxxxxx X. Xxxx, Esq.
Address: 0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
(Fax Number: 000-000-0000)
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